European shares continue record run as banks, commodities lead charge

LONDON Moves across major regional markets were subdued, with the benchmark index in London and Germany up O.l per cent

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Europeanshare gauge continued its record-breaking run on Tuesday, with banking and commodity stocks leading the gains, though market movements remained measured amid thin year-end trading volumes.

The pan-European STOXX 600 was up 0.02% at 590.57, as of 0943 GMT, edging ever closer to the 600 points milestone.

As 2025 draws to a close, the index is on track for its strongest annual performance since 2021, bolstered by a combination of declining interest rates, Germany's commitment to fiscal expansion, and investors diversifying away from premium-valued US technology stocks.

"The current market mood is very strong and positive for European equities, and we expect more of the same strong performance in 2026, particularly for defence stocks and European banks," said Kathleen Brooks, research director at XTB.

"The typical post-Christmas Santa rally has been muted this year, but only because we've had very strong gains in 2025 anyway." On Tuesday, banks advanced 1.2%, while the aerospace and defence sector was up 0.3%.

The defence index has been hitting consecutive record highs this year and, despite pulling back since October, is on track for its biggest annual rise since 1996, fueled by promises of increased defence spending across Europe. Basic resources shares led gains on the STOXX 600, up 1.4%, as silver and gold stabilised after a sharp pullback from record highs.